High-flying loonie to dominate meeting with PM

High-flying loonie to dominate meeting with PM

FREDERICTON – The meeting is unlikely to produce a grand nation-building idea, but a slew of pressing issues – as well as provincial gripes – are likely to emerge at this week’s gathering of premiers at 24 Sussex Drive.

Canada’s first ministers will meet with Prime Minister Stephen Harper Friday evening at his residence in Ottawa. Aside from an informal dinner in 2006, the meeting marks the first real gathering of the premiers with Harper.

Provincial officials don’t expect the short session to produce a wealth of announcements. And with some fresh faces on the scene – like new leaders from Alberta, Saskatchewan and Prince Edward Island – much of the meeting is expected to flow like a meet and greet, rather than a policy roundtable. Still, a host of outstanding issues seem poised to dominate.

First and most notable: the high-flying Canadian dollar and its adverse effect on manufacturing and exporting. Premier Shawn Graham won’t have to raise that issue himself. Ontario and Quebec have been hardest hit by the dollar’s rise. In fact, pleading by those two provinces sparked Friday’s meeting. New Brunswick has certainly not escaped the fallout. The rapid closure of northern mills serves as proof enough.

“It’s hurting the entire region, but New Brunswick in particular,” says Charles Cirtwill, of the Atlantic Institute for Market Studies, a think-tank.

“New Brunswick is feeling a lot more pain with very little upside so far.” The province, he says, has suffered compared to the likes of Nova Scotia and Newfoundland and Labrador – whose economies have been insulated by oil and gas revenues. Cirtwill says the provinces must take advantage of the rising dollar.

For New Brunswick that could mean fast-tracking major construction projects that will require American equipment and supplies, including proposed projects such as a second oil refinery and second nuclear reactor in the Saint John region.

Dave Plante, a vice-president with Canadian Manufacturers and Exporters, has a list of changes and improvements he would like to see discussed. He says more investment incentives are needed in his sector, as are enticements for employers to better train their workers. Plante also wants Ottawa to accelerate its corporate income tax reductions, to boost productivity. Such steps are needed, he says, for manufacturing and forestry companies already in crisis mode.

Nova Scotia Premier Rodney MacDonald says the high cost of oil will likely be one of the issues raised. Though he acknowledged talk of the dollar will dominate, MacDonald says there’s bound to be some overlap because rising fuel costs lead to higher transportation costs for export companies. With the world oil price hovering around US$100 a barrel, MacDonald says government expenses will also rise.

Cirtwill says provincial dismay with high fuel costs cannot be solved with federal cash alone. The provinces, he says, must be willing to sacrifice some of the tax revenue they gain from fuel sales. Still, he says the provinces can stress their commitment to home heating rebates and energy efficiency programs – and argue it is time for Ottawa to put up some relief funding.

“It’s a nice easy win for everybody,” he said in an interview. “And it’s a nice place for the provinces to point the finger at the feds because they have a bigger surplus than the provinces do.”

Cirtwill predicts the Atlantic gateway concept could also be raised, with individual provinces eager to secure funding for transportation and shipping projects. Immigration, sinking demographics and a need to break down provincial trade barriers could also surface, he said.

Results for New Brunswick rely solely on Graham’s performance.

“The danger we get into is whether it’s going to be Shawn Graham: the new New Brunswick premier – or Shawn Graham: the historical Atlantic Canadian complainer and whiner,” Cirtwill said. “I’m hoping it will be the innovative, thoughtful Shawn Graham.”

While a number of issues could make it on the agenda, most will be broadly discussed – so details will be few.

“I don’t expect this to be a meaty exercise,” concluded Cirtwill.

Craig Brett, an economist and research chair in Canadian public policy at Mount Allison University, says expectations must be realistic. The federal government, in the end, cannot do a whole lot to solve the problems that come with a high dollar, he notes. Brett says traditionally wealthy provinces, like Ontario, will likely try to dispel old assumptions.

Ontario will argue they are no longer the land of “milk and money,” he said. They will point to resource-rich Alberta, Saskatchewan and Newfoundland as the new players. Brett says some traditional issues of debate have largely cooled of late, like bickering over changes to the country’s equalization program.

That could bring so-called back burner issues to the fore. He points to the idea of federal transfers specifically for post-secondary education. Some proponents would like to see post-secondary funds removed from the overall social services transfer. Post-secondary cash, they contend, should flow through a separate account, similar to health care funding.